The National Audit Office (NAO) has published its first review of the data systems used by HM Revenue & Customs to report its performance and recommended that the department consider more automated and cost-effective ways of collecting data.
The NAO also wants to see HMRC doing more to develop its lead time indicator, which it says currently has 'major issues around how the data is collected and reported, and the reliability of the supporting systems'. NAO says improvements here should be prioritised as 'lead time could be a very useful measure of levels of work building up and an indicator of challenges on the horizon'.
The report says the systems supporting the business plan unit cost indicators and the tax receipts performance indicator were judged to be fit for purpose, although the unit cost indicators did not always show a meaningful measure of efficiency.
HMRC's published indicators measuring the unit costs of tax collection and benefits administration were criticised for failing to take into account other factors which can impact on efficiency. These include tax rates and economic conditions, which could make comparisons over time misleading.
The NAO examined 19 data systems, of which six were business plan indicators and six were operational data sets. It looked at how HMRC selects, collects, processes and analyses the data and whether or not the indicators it has chosen match the department's stated objectives. It also assessed how the results are reported and whether any limitations in the quality of the data systems are explained clearly.
On other indicators, there were issues with the effectiveness of the systems for collecting and analysing data. These included the systems for recording time spent on activities, which was not always comparable, and the system for measuring the number of days sick leave.
The NAO also found that HMRC's published and operational indicators focus on current year performance, which means they do not project performance beyond the end of the financial year and do not highlight future challenges or risks.
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